A home equity loan mortgage is a secured loan that uses your house as the collateral. This kind of equity is arrived upon by determining the market value of your home minus your mortgage. There are home equity loans and revolving home equity lines of credit and both are secured in lien on your property. A home equity loan mortgage usually attracts lower interest rates as compared to an unsecured loan and the interest that you pay on an equity loan mortgage is tax deductable to the tune of one hundred thousand dollars.
A home equity loan mortgage has a provision for a one time amount of money and has a fixed interest rate as well as a monthly payment. A home equity loan mortgage can also be aptly named a home improvement loan because of its suitability for projects that have a fixed budget for example the redesigning and reconstruction of your home. An equity loan mortgage has one distinctive risk in that if you fail to make payments in time, the lender has the legal authority to foreclose on your home and if you failed to make payments on a small amount, you might risk loosing the entire investment on the equity loan mortgage.
Taking out a home equity loan mortgage is a smart way to pay for a large scale project or pay off high interest debt from other expenses through debt consolidation. This is because home equity loans mortgages offer homeowners some of the most competitive interest rates on the lending market. Before you take out a loan, learn the facts. A low interest home equity loan might be your best option but you will need to read the fine print and make sure that you understand the details of the equity loan mortgage before you make any financial commitments.
If you are thinking about going back to school or are unable to raise fund to pay for your child’s college education, the equity loan mortgage might be a more practical alternative as compared to a certified student loan. Furthermore, when compared to some student or plus loans, a equity loan mortgage provides you with the adjustability that allows you use part of the money that you have borrowed on expenses that have no connection to your school fees. With an equity loan mortgage, the case is the same for whatever reasons you borrowed the money. You can get an equity loan mortgage for one reason and use part of the money for other reasons.
Tips and comments
You should always be careful not to fall into what is called negative equity loan mortgage which means that you end up owing more than your house is worth. This might happen if interest rates go up and the equity of your home falls. With an equity loan mortgage the danger is that you might find yourself coming to the end of your mortgage time and find that you are still indebted to your lender and have to get your mortgage time increased. The biggest advantage of an equity loan mortgage is that you can determine with reason, the amount of money that you are to pay back every month and this will help you because the monthly payments on the equity loan mortgage will not be too excessive and over your monthly earning.
You will be unable to sell off your house while you are still making payments on the equity loan mortgage. The lender keeps the papers of the property and without these papers; you are unable to sell your house and when you have repaid the equity loan mortgage fully, the papers are returned to you.